India’s cash-strapped national carrier to raise $850 million by selling seven aircraft

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  • Air India is expecting to raise $850 million by sale and lease back of seven wide-body aircraft
  • The airline intends to pay down its debt obligations through the proceeds from the sale.
  • The sale-and-lease back process will allow Air India to sell the aircraft, which will then be leased back to it by the buyer for 12 years
In a bid to trim its debt obligations, India’s national carrier, Air India (AI), is planning to raise as much as $850 million through a ‘sale and lease back’ of seven wide-body aircraft in the coming weeks, according to media reports.

The sale-and-lease back process will allow Air India to sell the aircraft, which will then be leased back to it by the buyer for 12 years with the option to lease for another three years, according to tender issued by the carrier. It will sell six Boeing 787-8 Dreamliner aircraft and one Boeing 777-300 ER aircraft. The aircraft were acquired by the airline between November 2016 and March 2018.

Air India plans to use the sales proceeds to repay its bridge loans and clean up its balance sheet.

Air India has already leased about 21 of its 27 Boeing 787-8 aircraft through the sale and lease back process, The Indian Express reported earlier.

In September, Air India had floated a tender to raise ₹5 billion but the effort was in vain as the loss-making airline did not receive a single bid from banks or investors for over a month. It is speculated that the carrier may raise an additional ₹5 billion loan by the next week.

Air India has been struggling financially for quite some time. The carrier currently has ₹550 billion worth of net debt obligations including working capital debt of over ₹350 billion.

SEE ALSO :

The Indian government is planning a rescue package for the aviation sector as the losses pile up

India’s finance ministry has rejected a bailout package for Air India

After a botched sale, the Indian government might just bail Air India out again
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